To The Moon

Last Week's Recap

The US Market - The Treasury yield surged

• The major indexes posted back-to-back weekly losses, with the S&P 500 off 1.94% and the Nasdaq down 2.34%. The 30-stock Dow slid nearly 1.86% on the week.

• U.S. payrolls grew by 256,000 jobs in December. Economists polled by Dow Jones expected an addition of 155,000 jobs. The unemployment rate, which was projected to remain at 4.2%, fell to 4.1% during the month.

• The yield on the 10-year Treasury note spiked to its highest level since late 2023. Growth stocks that could be hurt the most if a spike in rates causes investors to get more conservative led the session’s losses. Small-cap stocks also sensitive to borrowing rates, with the Russell 2000 index losing more than 3%.

• Stocks took another leg lower on Friday after the University of Michigan’s consumer sentiment index signaled concern on the inflation front. The overall index came in at 73.2 for January, missing a Dow Jones estimate of 74. Part of that was driven by one-year inflation expectations rising to 3.3% from 2.8%.

• Traders give 93.6% odds that the Fed stands pat on rates at its meeting later in January. And they think the central bank will hold rates where they are in the March meeting as well, according to the CME FedWatch Tool.

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The US Sectors & Stocks - LA wildfires hurt insurance firms and property owners

• The S&P 500 energy sector was the winner during the week. Crude prices closed at their highest level since October after the U.S. swept sanctions against Russia’s oil industry.

• Real estate sector lost more than 3% as Los Angeles wildfires cause large losses to significant homeowners and commercial property. Private market homeowner and commercial property insurers could face the biggest declines, according to Moody’s Ratings.

• Nvidia (NVDA) CEO Jensen Huang kicked off CES 2025 with a keynote outlining the company's artificial intelligence ambitions for consumer and enterprise users for the year ahead. Huang debuted a new AI superchip, which is a pint-sized version of its high-powered GB200 platform. He also announced new gaming hardware, including its high-flying $1,999 GeForce RTX 5090 graphics card for desktop PCs. In addition, Nvidia showed off its new Cosmos platform for developing physical AI systems like robots and self-driving vehicles. However, NVDA slid nearly 5% after its stock price hit a new record high.

• Constellation Energy (CEG) will buy Calpine, a natural gas and geothermal power generator, in a cash-and-stock deal valued at $26.6 billion, including $12.7 billion in assumed debt. CEG stock jumped 20% to a record high.

• Quantum computing stocks crashed after Nvidia's Huang predicted quantum computing won't be "very useful" for 15-30 years. IonQ (IONQ) tumbled more than 30% while Rigetti (RGTI) plunged 53%.

• Insurance companies were among the market’s biggest losers as the devastation caused by the uncontained Los Angeles wildfires spread. JPMorgan noted that AllState, Chubb and Travelers are the most exposed carriers to insured losses in the wildfires, and said Chubb could have a particularly high exposure given its high net worth focus in the region. Both of Allstate (ALL) and Chubb (CB) lost over 5%, while American International Group (AIG) slide 3% and Travelers (TRV) traded 4.1% lower.

• Meta outshone the rest of its ‘Magnificent 7’ peers this week with a 1.86% gain. The Facebook parent, which earlier this week announced it will eliminate its third-party fact-checking program. The move was widely seen as an attempt to ease tensions with President-Elect Donald Trump.

• Delta Air Lines (DAL) surged 13% on better-than-expected results for the fourth quarter. Delta guided higher on Q1 and 2025, while forecasting 10% earnings growth over the next three to five years. The stock price hit a record high on Friday.

• Walgreens Boots Alliance (WBA) soared nearly 28% on Friday after the company posted fiscal first-quarter earnings and revenue that beat analysts’ expectations.

Hong Kong Market - HSI lost 3.5%

• Hong Kong stocks fell, completing the biggest weekly loss in almost two months, as investors fret about weak consumption at home and heightened tensions in US-China trade ties. The Hang Seng Index (HSI) lost 3.5%.

• The US added some of China’s biggest companies including Tencent and EV battery maker Contemporary Amperex to a blacklist for alleged ties to the military, triggering a sell-off. Tencent (HK:0700) tumbled nearly 11% last week.

• “The first half of the year is likely to be more volatile in terms of stock market performance, especially as US-China bilateral tensions are expected to escalate shortly after the new administration takes office,” said Edith Qian, an analyst at CGS International.

Singapore Market - Three big banks soared new highs

• Singapore stocks flatten this week, with the STI down 0.01%.However, the benchmark index notched a new high on Wednesday, as shares of Singapore’s biggest bank DBS soared to S$45 for the first time. While OCBC and UOB also reached new record highs that day. Analysts are bullish on Singapore’s three banks, believing they are set to post earnings growth in 2025 given higher-for-longer rates.

• The government has issued Singapore Post an advisory to uphold proper corporate governance and processes after the whistle-blowing incident alleging falsification of international e-commerce shipment data.

• Singapore and Malaysia announced on Tuesday an agreement on a special economic zone in the southern Malaysian state of Johor, aiming to support investment and free up movement of goods and people between the countries.

Australian Market - The Australian dollar hit a new 2-year low

• The ASX 200 closed higher for the week, rising 0.53% despite watching S&P 500 futures fall 0.2%. However, the Australian dollar continued to hit a new two-year low of US61.70¢ overnight on Thursday.

• Shares of Star Entertainment (ASX: SGR) fell further on Friday to hit a record low, after the Australian casino operator raised concerns about liquidity and cash months after securing a debt lifeline.

• Arcadium Lithium (ASX:LTM), a company in lithium chemicals, announced a milestone in its proposed acquisition by mining giant Rio Tinto (ASX:RIO).

The Week Ahead

Macro Factors - Inflation data and banks earnings

• The latest inflation data and the start of first-quarter earnings season will be the highlights for investors this week.

• On Wednesday, the consumer price index (CPI) for December set to report. Economists expect headline CPI was at 2.9% annually in December, an increase from the 2.7% in November. Prices are set to rise 0.3% on a month-over-month basis, in line with the month prior.

• On a "core" basis, which strips out food and energy prices, CPI is expected to have risen 3.3% over last year in December. This would mark the fifth straight month of a 3.3% reading of core CPI.

• The December producer price index (PPI) will be released on Tuesday. The consensus estimate is for a 3.5% increase year over year. The core PPI, which strips out volatile food and energy prices, is seen rising 3.8%. This compares with gains of 3% and 3.4%, respectively, in November.

• Thursday will give markets an indication of consumer spending levels at the end of 2024. Economists estimate retail sales increased 0.5% over the prior month during December.

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Earnings

• Citigroup, Goldman Sachs, Wells Fargo, JPMorgan Chase, Bank of America, Morgan Stanley and more will highlight the week.

• Wall Street is expecting another strong quarter of earnings reports. Consensus estimates project earnings to grow 11.9% year over year, which would mark the highest earnings growth in three years, according to FactSet.

• US Banks Q4 Earnings Preview: JPM's Momentum Supports Leading Profitability; MS to Get Equity Fuel

• TSMC Q4 Earnings Preview: Focus on 2025 Semiconductor Outlook, Margin Sustainability